Get insight into how your customers make decisions with sense-making research

What is your view on how people make decisions?  In this blog post I describe why we at Susan Bell Research think sense-making is such a useful way to think about how consumers, citizens and business people make decisions. For us, it is better than the alternatives, so let's start there.

Alternative #1. Some researchers ask research participants to rank order or rate the factors they take into account in the decisions  This is an example from SurveyMonkey to illustrate what I mean

 

What are the objective factors that you think are in general taken into account when investing in the stock market?

Dividend

Low share price

Expectation of share price increase

Returns of other substitutive investments

Taxation of dividends and stock market gains

Other

https://www.surveymonkey.com/r/Y9VG2CR

I know this isn't a brilliant question, but it is typical enough to make my point, which is that there are three assumptions here, of questionable validity:

  1. One unstated assumption is that investors know an equivalent amount about each of the factors, for example that every investor understands dividends as well as he or she understands the share price. Hardly likely I would have thought. 
  2. Secondly, if all the factors are shown on the screen at the same time, as they are here, the implicit assumption is that all of these factors can impinge on a decision at the same time. This flies in the face of reality; we know that  big decisions like whether and how to invest can take weeks or months to make, so the initial trigger for an investor may have been taxation, with the investor then also considering the dividend during pre-purchase research. When making the decision to buy, the share price could well have mattered the most.  However, questions like the one above, and rating, ranking and MaxDiff questions do not allow for decisions that take time.
  3. Third, the question assumes perfect recall. Why any researcher would assume that people can remember such things is beyond me. 

This critique applies whether you use scale like this, rating scales, rank ordering, or some kind of Max Diff exercise.

Alternative #2. Perhaps you don't use questions like these because you believe in the insights from Behavioural Economics.  If so, you will argue that people don't make rational context-free decisions because our brains don't work that way.  Agree with that, but where does that insight leave us? Is B.E. telling us that all individuals make their decisions differently? That one investor decided because of conformation bias, and another because of priming?  Or perhaps the confirmation bias was present when the idea first germinated and then other biases kicked in later?  I don't know. I don't know how we would ever know.

Sense-making

Sense-making is a more useful way to think about how people make complex decisions, especially those that take time. According to sense-making, people often 'wade into' situations and then act. The actions they take are based on several factors including  their interactions with other people, copying what some do, and comparing themselves against other people. People then make sense of their actions afterwards, usually by talking about what they think and feel about what happened. This is a cognitive and emotional process, intertwined.

The Susan Bell Research team are experimenting with research techniques to best capture sense-making.  If you have a research project that seems ideal for this approach please get in touch so we can figure it out together!

 

Tags: Market Research, Making sense, sense-making, Decision Making

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